Price stability by March: CZI

THE Confederation of Zimbabwe Industries (CZI) expects prices of basic household commodities to stabilise by March with anticipated foreign currency inflows from tobacco sales.

Zimbabwe, which imports most of its basic goods following the collapse of its agriculture and manufacturing sectors, has seen price hikes over the past few months, driven mainly by worsening foreign currency shortages.

The foreign currency shortages, which intensified over the past two years on a widening trade gap, have seen most businesses funding their imports using cash sourced from the black market.

The country, a major global tobacco producer, reports increased foreign currency inflows during the crop's auction, which starts in February and draws sales in excess of US$500 million annually.

CZI president, Sifelani Jabangwe expressed optimism that the tobacco selling season and efforts by government to open the country up to foreign investment would bring stability.

"The state where we are at is not catastrophic because as we get into March the prices are going to be more stable because the (tobacco) auction floors will be open.

"The country's economy is in a very good position for growth right now and any investment that comes in will ensure that this economy grows especially given the position we have with the new economic dispensation," Jabangwe said, insisting that the proposed re-engagement with the international community meant that Zimbabwe was "headed somewhere".

"From March onwards, the prices will be stable. We also need to grow soya (beans) because that will reduce the amount of money we are pouring to import crude oil. We are spending about $240 million per year which is a lot of money," he added.

The CZI president said attracting more investment would bring a lasting solution to the foreign currency problem.

"There is not enough foreign currency. We are pushing for FDI (foreign direct investment) because that brings currency into the economy and we are also pushing for exports. What we are now saying is that we need to make sure that when the third quarter comes we are stable. If we don't plan for that we are going to have the same problems again because it's a cyclical issue," Jabangwe said.

Finance Minister, Patrick Chinamasa, recently said government would not resort to price controls, but would instead engage business in the face of continuing price hikes.

The country imports most of its goods after the collapse of the productive sector, which is anchored on agriculture, following the seizure of commercial farms over a decade ago.

Chinamasa said Zimbabwe's economy was afflicted by low levels of confidence, but stressed that the new administration, led by President Emmerson Mnangagwa, was working hard to resolve the crisis. - FinGaz